Set Unit cost to zero

Fisherman

All -

We're adopting a new business strategy on how we value some items in inventory, and we need to take action on several (200+) items in inventory. They all currently have a Unit Cost associated with them, but we need to set all of their Unit Costs to zero, as well as revalue all inventory to zero.

We've tried using the revaluation journal, but that does nothing to the item Unit Cost. Is there any way, short of recreating all 200+ items, to get the cost to zero?

raj2000be

Hi,

Creating new items would depend on the business needs and on the verision of navision you are using.

If the requirement is just that you have to bring down the valuation of the items to zero and make sure that these items do not have any valuation hence forth, I would not worry about the Unit Cost field in the item card.

All you would have to do is run a revalution journal for all the item to draw down the inventory value and then check the field "Inventory Value Zero" on the item card for each of these items.

Navision would make sure that the item with this field checked always get valued at zero cost even if you enter a value in the Purchase order or any item journal. Same with the sales, these items will always have 0 COGS even though there is a unit cost on the item card.

And now if these items have Standard Costing method then you just have to run the Standard Cost worksheet which would change the standard cost on the item card and create the revalution entries. Post the journal and you are good to go.

I hope this helped.

Regards
Rajesh

Fisherman

Raj.

Wish it were that simple. Some of these items are used as components in a finished good. That finished good must absorb the raw component at 0 cost.

The previous entry values do not matter to us (we dont' need to retain history) because the items never belonged to us in the first place.

I'm looking for a way to set all costs on the item card for these 200+ items to zero. We will maintain that going forward, and were planning on using inventory value zero, but I can't have someone calculate the standard on a new finished good that uses one of these and end up with the finished cost including the raw.

raj2000be

Okay, then the other option would be that you run the revalution journal to bring down the cost, check the inventory value zero and the just use a dataport to import 0 into the unit cost field for the 200+ items without validations. This would most certainly change the unit cost field to zero and there would be no problems going forward as this unit cost basically means nothing at this point in time given the scenario.

Savatage

after your revaluation journal - did you run the adjust cost-Item entries batch job?

David_Singleton

Fisherman, what Inventory valuation method are you using for these 200 Items?

Fisherman

We're using FIFO on everything.

I'd thought about trying to force them to standard, and making sure that all of the standard costs were set to zero, but I haven't done that yet.

Alex_Chow

You can always use the negative adj, then positive adj method.

Fisherman

?

Adjust out at value, and then back in at 0.00?

David_Singleton

Well if its FIFO, then all you need to do is set the Total of the Value entries for the Item to zero. I think maybe you are talking about the field "Unit costs" on the item card. Please ignore this field, it is only there for decoration.

You just need to create a revaluation journal that will set all the values to Zero, and post it.then run the adjust cost routine, and your costs will be zero. Don't forget to back date the revaluation journal to the date the Item Ledger entry was posted.

Savatage

& I always thought the Avg Cost field was just for decoration

Alex_Chow

Fisherman wrote:

?

Adjust out at value, and then back in at 0.00?

Like David said, I'm not sure why your revaluation didn't work. But the sure fire way is to negative out the quantities, then positive adjust it back with 0 cost.

This was how it was done before the revaluation journal came out.

Fisherman

How do you handle the Item Tracking (Lots) associated with the item? If you adjust quantities out and then back in, do you have to recreate the lot no. information records?

Alex_Chow

Yes, you would have to do so.

David_Singleton

But I think a revaluation Journal is a lot less work.

Even in older version of Navision, I used to do forced revaluations by just changing the costs field on the Item Ledger Entry table. And not only because of the amount of work, but also because of the disruption to business. Especially if you have open Purchase Orders or Production orders, and cant close them out to wipe out inventory.

Alex_Chow

David Singleton wrote:

But I think a revaluation Journal is a lot less work.

Even in older version of Navision, I used to do forced revaluations by just changing the costs field on the Item Ledger Entry table. And not only because of the amount of work, but also because of the disruption to business. Especially if you have open Purchase Orders or Production orders, and cant close them out to wipe out inventory.

I hope you're not suggesting to modify the ledger entries directly. Even as an experienced NAV developer, I never modify ledger entries unless my arms are really, really twisted heavily. And even then I probably still wouldn't do it.

Fisherman, when should this revaluation take place? I've noticed that backdated revaluation will not cause the cost to be 0. This is explained somewhere in the Inventory Costing course that I need to look up.

If the revaluation should happen on 1/1/07, then you should just run your revaluation as of today (1/3/07), then it will definately adjust your costs down to 0.

David_Singleton

Oh its definitely not a simple task, but I have done it, and definitely on more than one occasion.

When I first went freelance, my first job was to completely rebuilt the item ledger for a client whose NSC had not really set them up right. That was more than 10 years ago. I believe they are still running fine.

Of course you need to know what you are doing, since just one wrong small change can cause a lot of damage, but after doing it a lot of times, I get by.

Its important to understand a customers business needs, and sometime the cost of interruption to business is just to great. I know that you would feel more confident Reducing inventory quantities to zero, and then putting them back, but some times it is just not possible.

Of course I would never recommend anyone to try this a home. [-(

Oh and now we have revaluation journals so this is no longer necessary anyway.

Fisherman

I must be doing something wrong.

When I run the revaluation journal, the Average cost goes to zero, but the Unit cost stays the same as it was previously.

ssingla

But I think a revaluation Journal is a lot less work.

Absolutely right. This will be really very helpful in case item tracking lines has to be defined. Further it gives you the run time data.

But I think there is a catch in this:::
Revaluation Journal always show the remaining quantities i.e. if you want to back date the revaluation and in between the quantity has been consumed/adjusted it will not show them. Then you have to use the positive -negative solution.

David_Singleton

ssingla wrote:

But I think there is a catch in this:::
Revaluation Journal always show the remaining quantities i.e. if you want to back date the revaluation and in between the quantity has been consumed/adjusted it will not show them. Then you have to use the positive -negative solution.

Not true, just create a line in the journal exactly as you want it.

ssingla

:oops: :oops:

3.7 was behaving differently a couple of months ago. I had to work a lot on positive-negative. No idea now 4.0 is showing as David has mentioned ](*,) ](*,)

May be some change in 4.0 or some hot fix updation pending.......

David_Singleton

Go to a revaluation journal, enter and Item number, then drill down on the Applies To Entry No field, select the Item ledger entry, then set value to zero. If you have a lot, then create a batch job to populate the field.

It think your issue is that you are confusing the Revaluation Journal with the "Calculate Inventory" function. You can create revaluation without ever looking at the Calc Inv function.

Alex_Chow

Fisherman wrote:

I must be doing something wrong.

When I run the revaluation journal, the Average cost goes to zero, but the Unit cost stays the same as it was previously.

Like David mentioned, dont' worry about the unit cost on the item card. It just there as a reference. It will be back to 0 when you have any output/purchases/positive adj against that item.

Fisherman

But... It's not....

I had an item valued at 1.125 per unit. I ran the revaluation journal for the item, and changed the unit cost to 0.00. I posted. The average cost shows 0.00 - that's expected.

Then I "Purchased" 100 of the item at 0.00. Received, posted. Item card still shows 1.125.

I took that same part - with 0 standard, average, and last direct costs, put it on a BOM, and ran the "Calculate Standard Cost" function on the finished good that had zero cost to start with. Low and behold - finished good shows 1.125 in standard cost. Set standard back to zero and produced 100 of the finished good, and chose "Update Unit Cost" when I finished the production order. Now the unit cost on the finished good is 1.125.

My unit cost is still not going to 0.00, and it is being used in other places...

Fisherman

Anyone?

This is a huge issue for me. We need these unit costs to zero, but despite running revaluation, adjust item entries, adjust unit cost/prices, adjusting out at cost/in at zero, or performing physical inventory adjustments at cost and in at zero, I have yet to see Unit cost go to zero....

Alex_Chow

There's got to be something else that you missed. Revaluation journal will set the cost of the item to 0. If you purchase anything afterwards at 0 cost, it will still be 0.

At this point, since it's mission critical, it's best to just contact your local solution center to come in (or log in remotely) and take a look

Fisherman

Thanks Dead -

Our NSC has told us that from their testing, running the revaluation journal does not affect the Unit Cost, even on the next purchase... you're telling me that it does. I'm kinda lost here.

Savatage

[edit]

do you have locations or varients? are you choosing Calculate by item or Ledger Entry on the options tab?

raj2000be

Trust me with this, Just run the revaluation journal and import a dataport with just the 200+ item numbers and a unit cost of 0. This will not effect any other application area and also set unit cost to zero.

Alex_Chow

Fisherman wrote:

Thanks Dead -

Our NSC has told us that from their testing, running the revaluation journal does not affect the Unit Cost, even on the next purchase... you're telling me that it does. I'm kinda lost here.

[-X If the cost of the item is 0 to begin with, when you purchase items at 0 cost, the cost of the item will be 0. Period.

Like David said, don't worry about the Unit Cost field on the item card. It has no bearing when you run your valuation reports.

If you don't believe me, try revaluing your items, purchase something at 0 cost, then run your valuation report.

Fisherman

savatage -

we were calculating by item - what is the effect of running by ledger entry?